Which statement about external influences on personal financial planning is correct?

Which statement about external influences on personal financial planning is correct?

• A. A recession guarantees unemployment will rise and never fall.
• B. In a recession, unemployment is likely to rise, making it harder to get jobs.
• C. In an economic boom, unemployment will increase significantly.
• D. Redundancy has no impact on income.

Answer: (B)

External influences on personal financial planning include how the labour market and the wider economy affect income stability. In a recession, demand for goods and services falls, firms cut back, and unemployment tends to rise. With more people seeking work and fewer vacancies, finding a job becomes harder. This makes the statement that unemployment is likely to rise in a recession and that it will be harder to get jobs the most accurate reflection of how external factors influence planning, guiding you to prioritise contingency planning, so you’re prepared for potential lower or unstable income. The other ideas misrepresent typical economic patterns: unemployment does not rise forever during a recession, and in a boom period unemployment usually falls rather than increases. Redundancy does impact income because it ends earnings, at least temporarily, until another job is found.

External influences on personal financial planning include how the labour market and the wider economy affect income stability. In a recession, demand for goods and services falls, firms cut back, and unemployment tends to rise. With more people seeking work and fewer vacancies, finding a job becomes harder. This makes the statement that unemployment is likely to rise in a recession and that it will be harder to get jobs the most accurate reflection of how external factors influence planning, guiding you to prioritise contingency planning, so you’re prepared for potential lower or unstable income. The other ideas misrepresent typical economic patterns: unemployment does not rise forever during a recession, and in a boom period unemployment usually falls rather than increases. Redundancy does impact income because it ends earnings, at least temporarily, until another job is found.